IP Telephony market doubles in size

IP telephony is not only a mature market in Australia, it has doubled in size in the last year and will continue to grow strongly in 2005.

A report released by IDC this week found the enterprise IP telephony equipment market had grown 98 per cent in 2004, from the year before.

"Based on our rate of growth research we can expect this market to grow again by close to 80 per cent this year," IDC analyst, Susana Vidal, said.

According to the report major IP telephony equipment shipments for the year included Westpac with Cisco, Ernst and Young with Alcatel and Victoria Office Telephony Service with NEC.

Cisco continues to lead the Australian market in both IP PBX and IP Phones with 37 per cent of the market share. Avaya follows (22 per cent).

"Avaya channels are now more comfortable selling their products and have been able to expand beyond their call centre customer base and penetrate other sectors of the market," the report said.

Alcatel is in third place for IP phone sales which was probably fuelled by their Ernst and Young deal late last year, according to the report.

"Alcatel proved this not to be a one-off though, as it also won a deal with the Government in Q4 for more than 1000 IP phones," Vidal said.

Cost reduction was still the major drive for enterprise adoption of IP telephony, he said, and that the major trend in the market this year would be increased partnerships between vendors, service providers and systems integrators.

Cisco's Regional Manager of Voice Technologies, Peter Hughes, was not surprised by the findings.

"We have seen exponential growth in this market over the last two years," he said. "In fact, the market is now moving beyond simple cost reduction - as important as that is."

"Customers and partners are now working together to use their converged networks to rollout applications on the IP communication infrastructure that further add productivity. This includes desk top video conferencing, mobility solutions and IP contact centres."

Cisco has more than 600 customers across all customer segments in IP Telephony. More than 40 of these contracts are for more than 1000 phones. Its largest customers include: Westpac which has more than 30,000 phones, currently deployed by Telstra; IAG which has more than 10,000 phones, deployed by IBM and the government Service Provider InTACT which has more than 14,000 phones through a consortium between TransAct, Cisco and Dimension Data.

Hughes said the market has doubled for several reasons. These include the maturity of the products and technology, as well as the maturity of the Channel Partners' capability to implement complex solutions.

"Phones and applications are also now at a critical mass price point," he said.

Although Hughes agrees with Vidal that cost reduction remains an important drive for IP adoption, he stressed the importance that applications were now beginning to play as well.

"Now, further adding to the cost reductions, customers are putting new applications on their IP phone systems," Hughes said. "For instance, IP phones are being used to do all kinds of functions which traditional phones simply could not do, such as send messages to the sales teams about their forecasts and performances, in real time."

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